THE CARRIER'S LIABILITY FOR SUB-CARRIERS AND THE SUB-CARRIER'S LIABILITY

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THE CARRIER'S LIABILITY FOR SUB-CARRIERS AND THE SUB-CARRIER'S LIABILITY

A comparative study between Scandinavian and English law and the Rotterdam Rules

University of Oslo Faculty of Law

Candidate: Tove Dickman Haugvaldstad Supervisor: Ellen Eftestøl-Wilhelmsson

Deadline for submission: 11/01/2011 Number of words: 17,683 (max. 18,000)

16/10/2011

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Content

1 INTRODUCTION 5

1.1 The aims of the thesis - problems 5

1.2 The structure and limits of the thesis 7

2 PROBLEMS POSED BY THE HAGUE -VISBY RULES 9

3 THE ENGLISH SOLUTION 13

3.1 Introduction 13

3.2 Concepts in English contract and tort law 14

3.3 The identity of the carrier 16

3.4 The liability of the carrier and the sub-carrier 19

3.4.1 The carrier's liability for the sub-carrier 19

3.4.2 The sub-carrier's liability and defences and limitations 20

3.4.3 The Himalaya clause 22

3.4.4 Joint and several liability? 26

3.5 Summary 26

4 THE SCANDINAVIAN SOLUTION 27

4.2 Definitions of the relevant concepts 28

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4.3 The liability of the carrier and the sub-carrier 29

4.3.1 The carrier's liability for the sub-carrier 29

4.3.2 The sub-carrier's liability 32

4.3.3 An example: ND 2003.83 (FH Linda) 33

4.3.4 Defences and limitations 37

4.3.5 Joint and several liability 38

4.4 Summary 38

5 THE SOLUTION IN THE ROTTERDAM RULES 39

5.2 Definitions in the Rotterdam Rules 40

5.2.1 Definition of carrier and contract of carriage 40

5.2.2 Definition of performing party and maritime performing party 40

5.3 The liability of the carrier and the maritime performing party 44

5.3.1 The carrier's liability for performing parties and maritime performing parties 44 5.3.2 The maritime performing party's liability and actions against him 45

5.3.3 Defences and limits of liability 47

5.3.4 Joint and several liability 49

5.4 Summary 50

6 CONCLUSION 51

REFERENCES 53

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1 Introduction

1.2 The aims of the thesis -problems

Today it is common practice for the carrier to sub-contract the contracted carriage of goods. For the carrier to perform the carriage himself is now more of an exception. That the carrier will use only one type of transport is also uncommon, as the contracts of carriage today normally will cover the whole carriage, compelling the carrier to use different modes of transportation. When the carriage is sub-contracted, the carrier will use other carriers to perform the contractual obligations for him. This means that there will be a second, and sometimes a third, contractual layer involved.

A common feature is a carrier who does not have the capability to perform the carriage at all.

These “paper carriers” or non-vessel operating common carriers (NVOCC) will thus sub-contract all parts of the carriage.¹

This thesis will mainly examine the responsibility for and liability of the sub-carrier. The basis will be the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (“Hague Rules”), and Protocol of Signature (Brussels, 25 August 1924) and the Hague- Visby Rules - The Hague Rules as Amended by the Brussels Protocol 1968 (“Hague-Visby Rules”), as the countries compared in this study have all signed and ratified these rules. The thesis will start with a background to the problems posed by these rules with regards to sub-carriers, which are mainly the identity of the carrier, to ascertain who your contractual carrier and sub- carrier is, and the problem with suing the sub-carrier in tort; thereby possible avoiding the defences and limitations available to the carrier.

First the solution in the United Kingdom will be presented, as they have stayed true to the Hague-Visby Rules. Secondly the solution in Norway, Denmark, Sweden and Finland (“Scandinavian countries”), with main focus on the Norwegian legislation will be presented. The

1 Carr, Indira, International Trade Law, (Routledge-Cavendish) 2010, 4^th ed., pp. 7.

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Scandinavian countries have tried to align their legislation as far as possible with the United Nations Convention on the Carriage of Goods by Sea, 1978 (“Hamburg Rules”) without having to derogate from the Hague-Visby Rules.² As a third part of this thesis, the United Nations Convention Rules for the International Carriage of Goods Wholly or Partly by Sea, 2008 (“Rotterdam Rules”) will be presented as an alternative solution. The Rotterdam Rules have been signed by Norway, Sweden and Denmark, but has not been ratified by any of the countries described in this thesis.³

The thesis is a dogmatic, international study, comparing two different legal systems and a new international convention. Focus will also be on the historical development of the carrier's liability for the sub-carrier and the sub-carrier's liability towards third parties. The legislation regarding the sub-carrier has gradually increased, which is visibly just by looking at the amount of text regarding the issue.

The sub-carrier's role in transportation law is an interesting contractual issue, because normally the sub-carrier does not have a contractual relationship with the owner of the goods. The owner of the goods might have contracted with someone he considers reliable and does not want his good to be transported by anyone else. Due to this the use of a sub-carrier without the consent of the shipper was for a long time considered a major breach of contract, e.g. in Scandinavian legislation where it was treated in the same manner as deviation. The shipper will expect the goods to be carried according to the contract and the carrier should not expose the goods to any risks outside of the scope of that contract.⁴ The carrier was strictly liable for any damage and delay that occurred while the cargo was in the custody of the sub-carrier. The same situation would probably not occur today as the use of sub-carriers is wide spread and the whole sea adventure is rarely endangered because of another party performing the carriage instead of the contracted carrier.⁵

2 Falkanger,Thor, Bull, Hans Jacob, Brautaset, Lasse, Scandinavian Maritime Law – the Norwegian perspective, 3^rd ed., 2011, p. 281.

3 http://www.uncitral.org/uncitral/en/uncitral_texts/transport_goods/rotterdam_status.html , accessed 30.08.2011.

4 Sejerstad, Fredrik, Haag reglene (Konnossementskonvensjonen), (Universitetsførlaget), 1976, 3^rd ed. (by Ivar Kleiven and Jens Voght-Eriksen), pp. 84.

5 Falkanger, p. 355.

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1.2 The structure and limits of the thesis

The following chapters will describe the English and the Scandinavian legal systems with focus on the carrier's liability for the sub-carrier and the sub-carrier's liability towards third parties. Both systems are based on the Hague-Visby Rules, but the Scandinavian system has tried to align itself more to the Hamburg Rules. The English solution has however stayed with the Hague-Visby Rules, but through case law and clauses constructed by the market tried to solve the problems described above. In the Rotterdam Rules a new system has been introduced, although for sub- carriers, similar to the Hamburg Rules.

The English solution will be presented first, secondly the Scandinavian solution. Thirdly, a presentation of the Rotterdam Rules will follow. All chapters are defining the relevant concepts and terms. The identity of the carrier will also be touched upon here, as to determine who shall be considered carrier and sub-carrier for liability issues. Then carrier's liability for the sub-carrier will follow. After, the sub-carrier's liability and possible defences will be presented, concluding with the joint and several liability with the carrier. Last, a conclusion describing the similarities and differences, addressing the possible solutions and difficulties the Scandinavian and the English system might face with the introduction of the Rotterdam Rules.

As these questions are not outlined in the same way under English law, Scandinavian law and the Rotterdam Rules, the structure and the presentation of the questions may vary between them.

An example is the question of identity of the carrier which is heavily discussed under English law, item 3.3, but more included in the general discussion under the other systems.

The thesis will presume that the carrier pursuant to the contract is entitled to use a sub-carrier to perform the transport. This may be done in various ways. The signed booking note may indicate that the cargo will be carried on a ship on time charter. The contract of carriage may also contain a reservation, where as a starting point, the carrier will himself transport the cargo, but he retains the right to use a ship of another party. These clauses are called “liberty clauses” and can be more or less detailed.⁶ An example of this is provided in the Conlinebill clause 6:

“Whether expressly arranged beforehand or otherwise, the Carrier shall be at liberty to carry the goods to their port of destination by the said or other vessel or vessels

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either belonging to the Carrier or others, or by other means of transport...”

The problems arising should the carrier not be entitled to use sub-carriers will be left out of this thesis.

This thesis will focus on international trade between countries part of the Hague Rules and the Hague-Visby Rules. It will not comment on the rules specific for domestic trade.

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2 Problems posed by the Hague-Visby Rules

This chapter will shortly present the background to the Hague-Visby Rules, which are incorporated both in English and Scandinavian law. The main issues left unsolved with regards to this thesis will also be presented.

In the 19^th century, tension between shipowners and cargo interests increased due to the fact that shipowners imposed one-sided contractual terms upon the cargo interests. Common law practice freedom of contract and carriers could thus in carefully drafted bills of lading exempt themselves from all liability. In the United States, where cargo interests always have been more powerful than shipowners, the Harter Act was passed in 1893 to clearly define the rights and liabilities between the cargo interests and the shipowners.⁷ Similar legislation was adopted in other countries as well. As a response to the need for regulating liabilities of carriers, and also to facilitate international trade, the Hague Rules were presented in 1924. The Rules were adopted by many countries, but were however criticized.⁸

With the introduction of the Hague Rules some questions were left unanswered with regards to sub-carriers. One main issue was the uncertainty of the identity of the carrier:who is your contractual party? The shipowner carrying the goods, is he your contractual carrier or sub-carrier?

This question may not be always be easy to answer. Instead of the shipowner, the carrier could be a charterer or a “paper carrier” who assumes the carrier's responsibilities and the bill of lading contains contradictory or insufficient information about who the carrier is. A third party may encounter problems when trying to enforce his claim, especially if he is not entitled to a maritime lien on the vessel although he otherwise has a valid claim. Since this problem was not addressed properly in the Hague Rules, many legal systems found their own ways of dealing with this to protect the cargo interests, either by national legislative measures or left it for the courts to handle.

7 Aikens, Sir Richard, Lord, Richard, Bools, Michael, Bills of Lading, 2006, 1^st ed., paragraph 1.46-1.48 and 1.50-51.

8 Carver, Thomas Gilbert, Treitel, G.H., Reynolds, F.M.B., Carver on Bills of Lading, (Sweet & Maxwell) 2005, paragraph 9-062-9-063.

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This resulted in a vast legal diversity, where the incentive for forum shopping was strong.⁹

Another problem arises when the cargo interests tries to avoid the defences and limitations of the mandatory rules by suing in tort rather than under the contract. This could be done either against the carrier or against someone to whom the carrier has delegated the whole or part of the carriage; servants or independent contractors. The burden of proof is generally higher under tort claims, but this can be compensated by the fact that the cargo interest now may avoid any defences or limitations. It may also be possible for him to recover the amount from more than one liable person.¹⁰

Whether or not the liability in the Hague Rules applied to the tort claims was not answered.

The international maritime society agreed that the tort based claims should not be encouraged and preferably excluded. But there was no unity reached by the countries as to who should be protected with such rules and what they would look like.¹¹

The solutions to the above mentioned problems were solved differently by the legislators around the world. Two of them will be discussed in this thesis; the Scandinavian and the English solution. The tendency was however to differentiate between the different persons and parties to whom the carrier delegated his obligations, i.e. making a difference between agents and servants and independent contractors. In the Hague-Visby Rules article 4bis(2) a difference was made between the servants and agents on one side and the independent contractors on the other. Servants and agents are covered by the Rules, while independent contractors has to find other ways to make the limitations and defences available to themselves. Many countries have also made a difference within the group of independent contractors, i.e. sub-carriers, stevedores and pilots.¹²

The Scandinavian countries however did not use this method.¹³ The Norwegian Maritime Code 1994 no 39 (NMC) section 282 makes the defences and liabilities of the carrier available to all servants, agents and independent contractors, for whom the carrier is vicariously liable. Sub- carriers are also liable by law, section 286. The Scandinavian countries has thus solved many of the problems presented, but although the solution may seem simple, difficulties may still arise.

9 Smeele, Frank, The Maritime Performing Party in the Rotterdam Rules 2009, EJCCL 2010-1/2 (2010), pp. 73.

10 Smeele, pp. 73-74.

11 Smeele, pp. 74.

12 Smeele, pp. 74. For further examples see Smeele, pp. 74-75.

13 Smeele, footnote 27.

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An independent contractor is a third party who is contracted to perform a particular task.

Contrary to a person working under a contract of employment, the independent contractor is his own master and may have the discretion to perform the work in his own manner. Generally, this also means that the person who engages an independent contractor will not be vicariously liable for the independent contractor for torts committed by him.¹⁴ A difficult distinction may be between an agent and an independent contractor. Should the term agent be given a broad interpretation to include anyone performing carrier's functions, several independent contractors may be considered agents, even stevedores. Carver on Bills of lading however concludes that the term agent was

“meant” to cover a group of employees of independent contractors, who are not themselves employees of the carrier nor independent contractors.¹⁵ A sub-carrier is thus considered an independent contractor.

The intention with article 4bis(2) was to extend the protection of the carrier to other parties.

English courts had earlier held employees of the carrier personally liable in tort for injuries caused by their negligence.¹⁶ There had also been cases where stevedore companies had been held liable for damages caused by negligence, but they were unable to use the limitation and the time-bars in the Hague Rules. With the introduction of the Himalaya clause, see item 3.4.3, these problems were avoided. The proposal put forth was to give more direct protection to employees (servants), agents and independent contractors.¹⁷ Had the last group been included, the Himalaya clause might be considered unnecessary. Independent contractors were however not included. One of the major reasons were that some countries consider that local stevedores, despite the existent of Himalaya clauses, should not be entitled to the limitation system in the Rules. Another reason stated in Carver on Bills of Lading is that some of the defences in the Rules are not suitable for stevedore activities, such as negligence in navigation and management. The rules regarding limitation would however still be relevant.¹⁸

The exclusion of independent contractors has however lead to many other who falls into that

14 Martin, Elizabeth A, Law, Jonathan, Oxford Dictionary of Law, (Oxford University Press), 2006, 6^th ed., independent contractor.

15 Carver, paragraph 9-294.

16 Adler v Dickson [1951] 1 Q.B. 158 and see item 3.4.3.

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category are excluded from the Rules and miss out on the exceptions and limitations, although they are still relevant for them. Most importantly for this thesis is the exclusion of sub-carriers, such as the actual carrier when the contracting carrier is a “paper carrier” and carriers on feeder ships and on-carriers. In addition to the Himalaya clause, the sub-carriers are usually bailees (or sub-bailees), as they take possession of the goods, and can rely on the terms in the contract on which the goods were bailed (or sub-bailed) to them.¹⁹ Rules providing a more direct protection might have been useful.²⁰ This solution was provided for in the Hamburg Rule and now in the Rotterdam Rules.

19 See item 3.2.

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3. The English solution 3.1 Introduction

England has always been a shipping nation where shipowners interests have been powerful and in the first half of the 19^th century, the protection provided to the cargo interests in the bill of lading was weak. In 1855 the Bills of Lading Act was passed, with focus on giving the holder of the bill of lading lawful possession of the goods and a cause of action against the carrier in contract. The 1855 Act was however only concerned with who could sue whom, rules were also needed to regulate the substantive rights of those who could sue. At the same time as the Hague Rules were drafted, a bill was introduced to the parliament to enact the Hague Rules; the Carriage of Goods by Sea Act (COGSA) 1924.²¹

COGSA 1992 replaced the Bills of Lading Act and is the legislation now regulating bills of lading. In section section 5(5) it is stated that the provisions of the act shall have effect without prejudice to the application of the Hague-Visby Rules, having the force of law through COGSA 1971 section 1(1) and (2). This means that the United Kingdom must apply the Rules to a bill of lading on international carriages, if it relates to a shipment from a contracting state to the Rules or otherwise stated in article 10,²² stating when the Rules shall apply to the bill of lading. The substantive rights of the parties are however still only regulated in the Hague-Visby Rules and case law, which defines the different concepts and outlines the scope of the sections. The English system will thus differ from the Scandinavian by not having any legislation regulating the carrier's liability for the sub-carrier and the sub-carrier's liability, as this is not dealt with as wide in the Hague-Visby Rules as it is in the NMC.

In English law there are concepts and requirements, such as consideration and privity of contract, that does not impose the same problems under Scandinavian law as they do under English

21 Aikens, paragraph 1.34, 1.42, 1.44-1.46 and 1.50-52.

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law. As the sub-carrier normally is not a party of the contract of carriage, this may impose problems under English law, which may not be familiar to those with a Scandinavian legal background. Therefore will this chapter start with a short introduction to English contract and tort law and other relevant concepts.

Secondly, the identity of the carrier will be discussed, followed by carrier's and the sub- carrier's liability. As these questions are not regulated in the maritime legislation, case law and clauses provided by the market have been important for sub-carriers; the Himalaya clause being one of the most important.

3.2 Concepts in English contract and tort law

For a contract to be legally binding under English law there are five requirements that must be met.

First, there must be an intention to contract, it cannot be merely a moral matter. Secondly, the parties must have legal capacity to contract. Thirdly, certain formalities might have to be fulfilled, but normally an oral, written or even a contract inferred from conduct will be sufficient. Fourthly, usually there must be consideration, which will be explained below. Lastly, the object of the contract must not be illegal.²³

English law supports bargains and not gratuitous promises. Therefore a promise which one seeks to enforce must either be contained in a deed (originally a document made under seal, to indicate that the promise is serious) or supported by consideration. Consideration is a compensation for something promised or done. It must not be adequate to the promise given, but it must be of some value and thus sufficient for the promise given. An example of this can be found in the case Thomas v Thomas,²⁴ where a widow was granted a house for the cost of £1 per annum and a promise to maintain the house in good and tenantable repairs, was considered as sufficient consideration. Consideration must not be past, it cannot be given before the agreement was made.

Without consideration there is no binding contract between the parties.²⁵ For this thesis it is relevant for Himalaya clauses, see item 3.4.3.

23 James, Philip S, Shears, Peter, Stephenson, Graham, James' Introduction to English Law, (Butterwoths) 1996, 13^th ed., p. 224.

24 Thomas v Thomas (1842) 2 QB 851.

25 Poole, Jill, Textbook on Contract Law, (Oxford University Press) 2008, 9^th ed., pp. 128-129.

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One of the major notions that English contract law rests upon is privity of contract. The parties, “privy”, under a contract have a special legal relationship, hence only the parties will be subject to the obligations and confer the rights under the contract. That no rights can be assigned to third parties has lead to several problems for the courts, e.g. with Himalaya clauses. This part of the privity of contract has been criticized for many decades. In order to avoid the problem a number of devices and exceptions were invented. These were however at times so artificial and complex that a reform was needed. With the introduction of the Contract (Rights of Third Parties) Act 1999, third parties in certain circumstances may now enforce a contract to obtain a benefit under it, such as the ability to rely on an exemption or a limitation. Pursuant to the act, only such third parties who can be expressly identified in the contract by name, description or particular class, such as independent contractors, may satisfy the test of enforceability.²⁶ However, the 1999 Act has not wholly abolished the doctrine of privity of contract, and some cases might not be covered by the 1999 Act. Also, it might be to the third party's advantage to rely upon the principles developed under the years, rather than to be limited by the 1999 Act.²⁷

There are three ways in which a cargo owner may sue a party with whom he has no contract;

in tort, bailment and conversion. The carrier may defend himself with the general rules of causation , remoteness and time-limitation applicable by law, and if the parties have a contractual relationship the carrier is also protected by the special terms in the contract.²⁸

If the carrier through negligence has damaged the goods not belonging to him, the owner of the goods may sue the carrier in tort. The cargo owner must prove that the carrier negligently caused the damage. Should there be a contract between the parties, the injured party may sue either for tort of negligence or for breach of contract.²⁹

When a carrier takes custody of the goods from the shipper to transport them, the carrier is not only liable under contract, but also under bailment. The goods are delivered by one person, the bailor, to another, the bailee, to whom the goods are entrusted, for some purpose, under an agreement. Such a reason may be hiring of the goods, repairs, safe custody or delivery for carriage

26 Poole, pp. 443.

28 Baatz, Yvonne [et al.], [a], Southampton on Shipping Law, Institute of Maritime Law, (Informa), 2008, pp. 95-96.

29 Martin, tort.

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of the goods. When the purpose has been fulfilled the goods are either to be redelivered to the bailor, or dealt with according to the bailors instructions, or kept by the bailee until the are reclaimed. There is no need for a contract between the bailor and bailee. Bailment has thus commonly been used by cargo owners who want to sue the actual carrier with whom he does not have a contractual relationship. Bailment may be both for payment (bailment for reward) or for no reward (gratuitous bailment).³⁰

If a carrier has failed to deliver the goods to which the claimant have certain rights, the carrier may also be liable in conversion.³¹ Conversion is the tort of wrongfully dealing with a persons goods in a way which deny the owner his rights to the goods, e.g. destroying them.³² This concept will however not be dealt with under this thesis.

3.3 The identity of the carrier

This chapter will present the problem of the carrier's identity; is the shipowner the carrier or sub- carrier? The carrier is defined in article 1(a) of the Hague-Visby Rules and “...includes the owner or the charterer who enters into a contract of carriage with a shipper”. The contract of carriage must be covered by a bill of lading or similar document of title, cf. article 1(b). Charter-parties normally require the shipowner to sign the bill of lading on behalf of the owner of the vessel. Such bill are normally called “owner's bills”. There are also “charterer's bills”, which are signed by the charterer himself. The party signing will then be the contractual carrier and the actual carrier will be the owner of the vessel.³³

Sometimes however, it might be difficult for the cargo owner to identify precisely who the contractual party is and whether the bill of lading was singed by the owners or by the charterers.

This is mostly due to the many layers of charter-parties that may be involved and the way that bills of lading are signed. This might not always be seen as a problem; the cargo owner has multiple defendants to turn to with his claim. However, the choice of the claimant will be based on a commercial decision to get to the claimant with the most money and most accessible and litigation-

30 Martin, bailment.

31 Baatz, [a], pp. 95.

32 Martin, conversion.

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efficient jurisdiction. It is important the get the right defendant; if the cargo owner picks up the wrong trail he might after a costly litigation end up with the wrong defendant and the then the claim might be barred against the rightful defendant. One solution to this problem is the bill of lading, although it was also part of the problem.³⁴

Identity of carrier clauses are commonly used in charter parties. They have been used, as the name indicates, to identify who the carrier is. An example of such a clause can be found in Conlinebill clause 17:

“The Contract evidenced by this Bill of Lading is between the Merchant and the Owner of the vessel named herein (or substitute) and it is therefore agreed that said Shipowner only shall be liable for any damage or loss due to any breach or non- performance of any obligation arising out of the contract of carriage, whether or not relating to the vessel's seaworthiness.”

An important judgment regarding the identity of the carrier is The Starsin³⁵ where the question of the carrier's identity was thoroughly dealt with. The vessel was on a time charter to Continental Pacific Shipping (CPS) and carried timber on the relevant voyage. Several bills of lading were issued and signed by the signing party “As agents” for carrier CPS. On the front of the document the logo and printed words of CPS were visible. The bills of lading also contained an identity of carrier-clause on the reverse, stating that the contract was between the merchant and the owner of the vessel. During the voyage the timber was damaged, allegedly caused by bad stowage. One of the questions in the case was thus if the bills of lading could be considered owner's bills, where the shipowner is considered the carrier, or charterer's bills, where the charterer is the carrier, as article 1(a) in the Hague-Visby Rules states that both the charterer and the shipowner may be the carrier.³⁶ When the bill of lading is unclear, who of them is considered the carrier?

The bills of lading were considered to be charterer's bills of lading for a number of reasons.

First, the Court concluded that the language on the front simply spoke of the charterer being the carrier and the words written by the parties took priority from the pre-printed clauses on the

34 Baatz, [a], pp. 104-105.

35 Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2003] 1 Lloyd's Rep 571.

36 Girvin, Stephen, Carriage of goods by sea, Oxford University Press, 2011. paragraph 12.09, 12.11 and 19.14.

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reverse. Secondly, the bank market had adopted the Uniform Customs and Practice for Documentary Credits (UCP), which were widely used in the business. The UCP are written by a private international organization, not a governmental body, and they try to establish a uniform market practice.³⁷

The UCP were first issued in UCP 500 in 1993 and are now superseded by UCP 600 as of 2007. The rules are prepared by the International Chamber of Commerce (ICC) and are mainly used by bankers and commercial parties in trade financing.³⁸ Pursuant to article 20 of the UCP 600, the bill of lading must indicate the name of the carrier and be signed either by the carrier or master or an agent acting on behalf of one of them. Bills of lading are commonly used by bankers as a security for non-payment by the buyer of the goods as applicant under a letter of credit. Therefore the bank has an interest in who has the physical possession of the goods.³⁹ The use of the UCP to identify the signature in the bill of lading was thus recognized by the House of Lords in The Starsin.⁴⁰ The conclusion was that what could be considered good enough for a banker should be good enough for a cargo claimant when he wants to identify the contracting carrier.⁴¹⁴²

In Southampton on Shipping Law, Professor Charles Debattista concludes that there are however three things to keep in mind with regards to the identification of the carrier. First, should the vessel be on a bareboat charter-party, then the owner of the vessel will be not be visible to anyone but the bareboat charterer; as the charterer will act as the owner of the vessel. Secondly, as this is a matter of contract; any clause on the front of the bill of lading clearly indicating that the logo or signature are wrong will override them. Thirdly, should there be a situation where the Courts are not successful in identifying the carrier from the logo or signature; there are a number of presumptions that the Court may fall back upon, one of the most important being that the master

37 UCP 600, Foreword by Guy Sebban, Secretary General, International Chamber of Commerce, 2007, pp. 1.

38 http://en.wikipedia.org/wiki/Uniform_Customs_and_Practice_for_Documentary_Credits , accessed 26.05.2011.

39 Baatz, [a], pp. 106.

40 In The Starsin the UCP 500 article 23 was used, where it was specifically stated that “...banks will[...]accept a document, however named, which: (i) appears on its face to indicate the name of the carrier...”. Lord Bingham of Cornhill stated on page 578 that “it is plain that banks will not examine terms and conditions on the back of the bill of lading”. With the introduction of UCP 600 this specific requirement has been removed, but the rules are still important as they require the name of the carrier to be indicated on the bill of lading and in several ways detailing who and in what capacity the bill of lading is signed.

41 Baatz, [a], pp. 106.

42 Some of the speeches made in The Starsin may however be disputed, see Aikens, paragraph 7.69.

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is deemed to have signed the bill of lading on behalf of the shipowner, rather than the charterer.⁴³ If the vessel carrying the goods is not charterer out, but the goods are trans-shipped on another vessel, the cargo claimant can still sue his contractual party because of the contract. He may also sue the owner of the vessel on which his goods were carried when they were damaged. This can be done either in tort, if the claimant can establish negligence, or if the shipowner has breached his duties as a bailee.⁴⁴ This issue will be further described below in item 3.4.2.

3.4 The liability of the carrier and the sub-carrier

This chapter will present the carrier's liability for the sub-carrier and the sub-carrier's liability. The possible defences will also be presented, with special focus on the Himalaya clause, as this has been the most important tool for sub-carriers to limit their liability under the Hague-Visby Rules.

Lastly the question of joint and several liability of the carrier and sub-carrier will be presented.

3.4.1 The carrier's liability for the sub-carrier

For a third party who has suffered a damage, he must prove that the loss was a result of the carriers' breach of his obligations, either under contract, tort or bailment.⁴⁵ Should the relationship between the parties be governed by a bill of lading incorporating the Hague-Visby Rules, the third party must either establish that the carrier has breached the rules relating to the vessel, article 3(1), or the rules relating to the custody of the goods, article 3(2).⁴⁶ If the damage thus is caused by a sub-carrier employed by the carrier, will the carrier be liable for the faults and omissions by the sub-carrier?

Pursuant to article 3(1) must the carrier before and at the beginning of a voyage exercise due diligence to make the vessel seaworthy, properly man and equip the vessel and make the holds cargoworthy. If the third party can establish unseaworthiness, the burden of proof shifts to the carrier, who must prove that he has exercised due diligence. In The Muncaster Castle⁴⁷ the House of Lords concluded that a carrier is liable for any servant, agent and independent contractor, to

43 Baatz, [a], pp. 106.

44 Baatz, [a], pp. 106.

45 Baatz, [a], pp. 114.

46 Baatz, [a], pp. 119.

47 Riverstone Meat Co. Pty. Ltd. v. Lancashire Shipping Co. (The Muncaster Castle) [1961]1 Lloyd's Rep. 57.

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whom he assigns his obligations under the contract of carriage, that they have exercised due diligence in making the vessel seaworthy. In this case, goods were damaged due to seawater entering the cargo hold. It was found that the vessel was unseaworthy, because a fitter employed by a yard, had negligently failed to secure the nuts on the inspection covers evenly or sufficiently.

The carrier is thus not exempted from liability on the ground that he himself has showed due diligence when selecting a competent independent contractor who was to make the vessel seaworthy.⁴⁸

Article 3(2) of the Hague-Visby Rules requires the carrier to properly care for the goods while in his custody. This duty, same as with making the vessel seaworthy, is not delegable.⁴⁹ The carrier will thus be liable for the omissions by the sub-carrier.

3.4.2 The sub-carrier's liability and defences and limitations

Under English law may the cargo interest always claim against the sub-carrier with whom he has no contract, if the claimant can establish either a tort committed by the sub-carrier or a breach of the sub-carrier's duties as a bailee. The cargo interest may thus sue either in tort or bailment of the sub-carrier has failed in his duty of care.⁵⁰

This solution is not remarkable in English law, the big questions is instead what kind of defences the sub-carrier may use. Will he be able to use the defences and limitations set out in the bill of lading?⁵¹

One of the first cases to deal with this question was The Elder Dempster,⁵² where a shipment of palm oil had been damaged during a carriage, allegedly by bad stowage. The contracting carrier normally used his own ships for these carriages for this trade, but this time the goods were carried on a time-chartered vessel. The bill of lading however was still the same as when the company used their own ships. The House of Lords touch upon the point that the shipowners were to be equally protected by the bill of lading although not a part of the contract, but this is not their main concern (which was whether it was bad stowage or unseaworthiness). Despite this, their reasoning

48 Baatz, [a], pp. 119.

50 Baatz, [a], pp. 106.

51 Baatz, [a], pp. 106-107.

52 Elder Dempster & Co v Paterson Zochonis & Co [1923] A.C. 522.

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has been a source to controversy many years after the judgment.⁵³ The House of Lords looked at many different views to solve the problem. One of them was to see if the contracting carrier acted as an agent for the shipowner to create a contract between the shipowner and the cargo interests.⁵⁴ It was also argued that an implied contract existed between the parties, without the help of an agent, based on the principle of the shipper presenting the goods for carriage and the master accepts them.⁵⁵ Other views presented were the doctrine of vicarious immunity (which since then has been rejected),⁵⁶ restrictions on duty of care⁵⁷ and bailment.⁵⁸

A final answer was given in The K H Enterprise,⁵⁹ where it was concluded that the actual carrier could avail himself the defences and limitations in the terms in the bill of lading issued between the carrier and the shipper. The claimants were owners of goods shipped on board the defendants' vessel K H Enterprise. The goods were shipped under bills of lading governed by Chinese law, and provided for dispute resolution in Taiwan and a clause entitling the carrier to sub- contract the carriage “on any terms”. Following a collision with another vessel, the K H Enterprise sank with all its cargo. The claimants commenced proceedings in Hong Kong against the shipowners as bailees. The defendants claimed that the proceedings should be stayed, as any dispute should be settled in Taiwan in accordance with the bills of lading. The question was, among others, whether the terms in the bill of lading from the contracting carrier (bailee) to the actual carrier (sub-bailee) were wide enough to authorize consent to the application of the exclusive jurisdiction clause to the sub-bailment. The Court assumed on the facts in the case that there was no contractual relationship between the parties, only the contract between the bailee and the sub-bailee, and stated:

“... if the effect of the sub-bailment is that the sub-bailee voluntarily receives the goods of the owner and so assumes towards the owner the responsibility of a bailee, then to the extent that the terms of the sub-bailment are consented to by the owner it can

54 Carver, paragraph 7-006 et seq.

56 Carver, paragraph 7-015-7-016.

59 Owners of cargo lately laden on board the KH Enterprise v Owners of the Pioneer Container (The K H Enterprise) [1994] 1 Lloyd's Rep 593.

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properly be said that the owner has authorised the bailee so to regulate the duties of the sub-bailee in respect of the goods entrusted to him, not only towards the bailee, but also towards the owner.”⁶⁰

3.4.3 The Himalaya clause

This chapter will present one of the solutions provided by the industry to enable servants, agents and independent contractors to enforce limitations and defences protecting the carrier. The introduction of Contract (Rights of Third Parties) Act 1999 has not eliminated the need for the Himalaya clause, although many cases will now be subject to legislation. A further discussion regarding independent contractors and the 1999 Act can be found in item 3.2.

The Himalaya clause derives from the decision in Adler v Dickson. In the case a passenger on board the vessel the Himalaya brought an action in tort against the master and the boatswain following a fall due to an improperly secured gangway. On the backside of the ticket it was stated that the company would not be liable for any damage or injury whatsoever. The defendants tried to use this statement in their own defence, but the Court of Appeal concluded that the statement did not extend to include the company's servants or agents. The case lead to the innovation of the Himalaya clause, extending the defences of the carrier to his servants, agents and independent contractors.⁶¹

Himalaya clauses are drafted differently, but an example can be found in Conlinebill clause 18:

“It is hereby expressly agreed that no servant or agent of the Carrier (including every independent contractor from time to time employed by the Carrier) shall in any circumstances whatsoever be under any liability whatsoever to the Merchant for any loss, damage or delay arising or resulting directly or indirectly from any act, negligence or default on his part while acting in the course of or in connection with his employment and[...]every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defence and immunity of whatsoever nature

60 The K H Enterprise, pp. 600.

61 Girvin, paragraph 9.34.

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applicable to the Carrier or to which the Carrier is entitled hereunder shall also be available and shall extend to protect every such servant or agent of the Carrier acting aforesaid...”

Himalaya clauses are normally combined with circular indemnity clauses, where cargo owners promise that no claim shall be made against the carrier's servants, agents or independent contractors and if such a claim is made, they will indemnify the carrier.⁶² These clauses will not be further discussed in this thesis.

In Scruttons Ltd v Midland Silicones Ltd⁶³ where a drum was damaged by stevedores, who tried to limit their liability through a Himalaya clause in the bill of lading. They claimed, among other things, that through the agency of the carrier they were brought into a contractual relationship with the cargo interests, making the limitation rules available to them. Although the House of Lords concluded that the stevedores could not avail themselves the same limitations as the carrier, Lord Reid suggested that the agency argument could succeed provided that: (i) the bill of lading must make clear that the stevedores were intended to be protected by the limitation rules;

(ii) that the carrier was contracting as a principal and agent of stevedores regarding the limitation rules; (iii) that the carrier had authority to from the stevedores; and (iv) that the difficulties about consideration moving from the stevedores were overcome.⁶⁴ Following Midland Silicones clearer, more carefully drafted Himalaya clauses were devised.⁶⁵

The Eurymedon⁶⁶ dealt with the third and fourth issues from Midland Silicones. A drilling machine was transported from Liverpool to Wellington under a bill of lading, which incorporated the Hague Rules and contained a Himalaya clause. During discharge in August 1964 the drilling machine was damaged due to negligence on behalf of the stevedores. In 1967 the claimant sued the stevedores for the repair costs for the damaged drill. The Hague Rules article 3(6) states that unless any action is brought within 1 year after delivery, the carrier is discharged from all liability for loss

62 Nikaki, Theodora, [a] Himalaya Clauses and the Rotterdam Rules, Journal of International Maritime Law, (2011) 17, pp. 22.

63 Scruttons Ltd v Midland Silicones Ltd [1961] 2 Lloyd's Rep. 365.

64 Midland Silicomes, pp. 374.

65 Nikaki, [a], pp. 24-25.

66 New Zealand Shipping Co Ltd v AM Satterhwaite & Co Ltd (The Eurymedon) [1975] AC 154 (PC).

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or damages. The stevedores sought to rely upon the clause in the bill of lading exempting them from all liability if the claim is not brought within a year. Lord Wilberforce gave the majority's opinion and stated:

“to give the appellant the benefit of the exemptions and limitations contained in the bill of lading is to give effect to the clear intentions of a commercial document, and can be given within existing principles. They see no reason to strain the law or the facts in order to defeat these intentions...”⁶⁷

It was found that the continuous relationship between the carrier and the stevedores gave the carrier authority to contract on behalf of the stevedores.⁶⁸ As to whether there could be any consideration⁶⁹ between the stevedores and the shipper to make the bill of lading valid between the parties, Lord Wilberforce concluded that:

“the bill of lading brought into existence a bargain initially unilateral but capable of becoming mutual, between the shippers and the appellants, made through the carrier as agent. This became a full contract when the appellant performed the services by discharging the goods. The performance of these services for the benefit of the shipper was the consideration for the agreement by the shipper that the appellant should have the benefit of the exemptions and limitations contained in the bill of lading...”⁷⁰

The conclusion has been criticized and arguments have been that it is artificial as the wording in the clause seems to create an immediate contract between the parties, not an offer of a unilateral contract by the stevedores. With the drafting of the Hague-Visby Rules, the criticism was not met as article 4bis(1) and (2) only provide servants and agents “not being an independent contractor”

the benefit of the exemptions and limitations, as stevedores are normally considered to be just that.⁷¹

With the introduction of the Contracts (Rights of Third Parties) Act 1999, Himalaya clauses

67 The Eurymedon, pp. 540.

69 See item 3.2.

71 Girvin, paragraph 9.35-9.36.

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were now more easily applicable, as there is no need to try to argue for an unilateral or implied contract or anything similar. The impact and scope of the 1999 Act has been further explained above in item 3.2.

How wide is then the Himalaya clause? This was elaborated in The Mahkutai,⁷² where the ship was arrested, because the cargo had been damaged during the voyage. The ship was on a voyage charter-party and the bill of lading contained a Himalaya clause, stating “all exceptions, limitations, provisions, conditions and liberties herein benefiting the carrier as if such provisions were expressly made for their benefit”, and a jurisdiction and choice of law clause naming Indonesian jurisdiction and law. When the ship was arrested in Hong Kong, the shipowner issued a stay of jurisdiction. The Committee reviewed the case on two alternatives, either they were entitled to a change of jurisdiction under the Himalaya clause or on the principle of bailment on terms.

Lord Goff gave the judgment and noted that the shipowner was not trying to invoke an exemption or limitation, but an exclusive jurisdiction clause, which would “involve a significantly wider application of the relevant principles...”.⁷³ He concluded that an exclusive jurisdiction clause could not be an exception, limitation, provision, condition or liberty on the basis of the function of the Himalaya clause, which is to “prevent cargo owners from avoiding the effect of contractual defences available to the carrier (typically the exceptions and limitations in the Hague-Visby Rules) by suing in tort persons who perform the contractual services on the carrier's behalf”.⁷⁴ As the Himalaya clause did not include the jurisdiction clause, the shipowners could thus not be subject to the jurisdiction clause under bailment, as this would be inconsistent with the terms of the bill of lading.

The interpretation of Himlaya clauses may cause problems over who may invoke them. In The Starsin, facts in item 3.3. one of the main issues was whether the Himalaya clause included shipowners. The clause in question read that “no servant or agent of the carrier including every independent contractor[...]shall in any circumstances whatsoever be under any liability whatsoever...”. The House of Lords concluded that shipowners must be included as independent

72 The Mahkutai (P.C.) [1996] 2 Lloyd’s Rep. 1.

73 The Mahkutai, pp. 4.

74 The Mahkutai, pp. 9

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contractors.⁷⁵

In the literature, there are also discussions regarding Himalaya clauses exempting servants, agents and independent contractors from liability and whether this may be void under the Hague- Visby Rules article 3(8). Article 3(8) states that any clause relieving or lessening the carrier's liability provided in the article 3 shall be null and void. This will not be commented on in this thesis.⁷⁶

3.4.4 Joint and several liability?

There is no article in the Hague-Visby Rules that provides a clear message whether carrier and the sub-carrier will be jointly and severally liable for damages occurred to third party cargo interests.

Carver on Bills of Lading states that such a view however exist, but that it is much clearer dealt with under the Hamburg Rules article 10(4). It has been suggested that the contracting carrier and the actual carrier may be regarded as a joint venture and therefore are jointly and severally liable.

However, it is also stated that this may be a controversial application of the agency reasoning and is more a suggestion for a law reform.⁷⁷ This area does not appear to have been satisfactory put into statute and a reform here might be welcome.

3.5 Summary

The problems posed by the Hague-Visby Rules have been solved in English law through case law and contract drafting. The identity of the carrier has within the last ten years seen a solution, making identity of carrier-clauses invalid, should the bill of lading indicate another carrier. Where the sub-carrier is sued in tort, case law has made it clear that he may still avail himself the same defences as the carrier. Here the Himalaya clause was, and is, an important tool, as independent contractors are excluded from the protection of the Hague-Visby Rules article 4bis(2). The Contracts (Rights of Third Parties) Act 1999 has made the applicability of the Himalaya clause easier.

75 See also Nikaki, [a], pp. 38.

76 See Carver, paragraph 9-191 et seq. and The Starsin.

77 Carver, paragraph 9-101 and footnote 78-82.

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4 The Scandinavian solution 4.1 Introduction

The Scandinavian countries have adopted similar maritime legislation and this thesis will have the main focus on the Norwegian legislation, the NMC. The Hague-Visby Rules were incorporated into the legislation in 1973. In section 251 the Hague-Visby Rules are defined as the Convention and a Convention state is a state bound by the Hague-Visby Rules. A state does not have to have accepted the protocol of 1979 to be considered a Convention state as the protocol only regulates the calculation unit. Although Norway signed the Hamburg Rules in 1978, they have never ratified the rules and neither have the other Scandinavian countries. The Hamburg Rules are not in force as of today, but the Scandinavian legislation is influenced by them.⁷⁸

The Hamburg Rules were designed to replace the Hague-Visby Rules and to give a solution to the problem when more than one carrier is involved. First, whether the carrier remains liable while the goods are in the custody with another carrier and secondly, the question of the responsibility of a carrier with no contractual relationship with the shipper.⁷⁹ Article 10(1) states that when an actual carrier performs part of the carriage, the carrier remains responsible. The actual carrier will be responsible for the part of the carriage that he performs under the same provisions as the carrier pursuant to article 10(2). An actual carrier is the person to whom the performance or part of the performance has been entrusted by the carrier according to article 1(2).

The rules regarding the carrier's and sub-carrier's liability is regulated in chapter 13 of the NMC, which is more or less based on the Hamburg Rules. The chapter is almost entirely mandatory according to section 254 and contractual provisions deviating from the chapter will not be valid. The contract will however remain valid.

This chapter will start with defining relevant concepts. Secondly the liability of the carrier for

78 NOU 1993:36, pp. 14-15.

79 Selvig, Erling, Through-carriage and on-carriage of goods by sea, The American journal of Comparative Law, 27/1979, pp. 369.

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the sub-carrier and the sub-carrier's liability will be discussed. As an example of the problems imposed in Scandinavian law, ND 2003:83 will be presented.

4.2 Definitions of the relevant concepts

The carrier is defined in NMC section 251 as “the person who enters into a contract with a sender for the carriage of general cargo by sea”. Who the carrier really is must be decided by ordinary contract rules and the carrier will normally be considered to have signed the bill of lading, unless otherwise proved.⁸⁰ Normally bills of lading may contain identity of carrier clauses⁸¹ to identify the carrier. These may be void as it contradicts NMC section 285, as they do not fulfil the requirements for exemption of liability given in the second paragraph. Pursuant to section 252 and 254 will section 285 in most cases be mandatory.⁸² Scandinavian Maritime Law also states that identity of carrier clauses also raises questions regarding interpretation and asks the question how clear the language on the front of the bill of lading must be to override the clause on the reverse.⁸³ Should the master sign the bill of lading NMC section 295 states that a bill of lading signed by the master of the ship carrying the goods is regarded as having been signed by the carrier, making a time charterer bound by the master's signature.⁸⁴ Under Norwegian Maritime Code 1893 no 01 (NMC 1893), the identity of the carrier could be more difficult to ascertain. In ND 1997. 302 the bills of lading indicated one carrier, who was not the carrier, making the claimants choose the wrong defendant. The Norwegian Supreme Court attributed this to the wrong defendant and made him liable, as the ownership structure of the vessel was complicated and easily could lead to misunderstandings.

The transport contract is not defined in the NMC. The term does however have the same meaning as in the Hamburg Rules article 1(6), pursuant to the NOU 1993:36.⁸⁵ The carrier undertakes against payment of freight to transport the goods by sea from one port to another.

Should the contract include more than only a sea carriage, the NMC will only be applicable to the

80 NOU 1993:36, pp. 19.

81 See item 3.3.

85 NOU 1993:36, pp. 19-20.

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the sea leg of the voyage.

The sub-carrier is also defined in section 251 as “the person who, pursuant to an assignment by the carrier, performs the carriage or part of it”. The NMC 1893 did not define such a sub- carrier; the definition was taken from the Hamburg Rules article 1(2) “actual carrier”. The sub- carrier is part of the second chain of the contract.⁸⁶ The sub-carrier may perform the whole carriage, for example when a “paper carrier” has signed the transport document.⁸⁷ He may also just take part of the transport, whilst the contractual carrier takes the rest. The definition may also include several sub-carriers contracted by the carrier. This does not mean, however, that all of them will be liable, see item 4.3.2.

4.3 The liability of the carrier and the sub-carrier

In this chapter the carrier's liability for the sub-carrier will be presented, starting with a historical overview of how the liability has developed. Secondly, the sub-carrier's liability will be discussed, followed by an example with the case ND 2003.83 to show that although the rules regarding the sub-carrier's liability may seem simple, they can still impose problems. Fourthly, a discussion about the sub-carrier's possibility to limit his liability will be presented, concluding with the carrier's and sub-carrier's several and joint liability.

4.3.1 The carrier's liability for the sub-carrier

The carrier's liability has become more onerous during the past century. The allocation of liability between the carrier and the sub-carrier was not solved in NMC 1893 until the incorporation of the Hague-Visby Rules in 1973 with section 123.⁸⁸ Before 1973, case law was the primary legal source to solve the problems arising when the master of the ship signed the bill of lading. Already in ND 1903.331 the Supreme Court decided that if the master signed the bill of lading he could only bind the performing carrier, not the contracting carrier, as the master only signed on behalf of his employer. This meant that the carrier never would be liable unless he signed a bill of lading himself. A similar question was raised in ND 1955.81 and ND 1960.349, where the principle was

86 NOU 1993:36, pp. 20.

87 Lover og kommentarer, Gyldendal Rettsdata, www.rettsdata.no printed 05.19.2011, Sjøloven § 251 Note (426).

88 Lov 8 juni 1973 nr. 38.

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upheld.

In the Norwegian case ND 1955.81 the question was whether the carrier, who had time chartered the vessel Lysaker, could be considered to be responsible under the bill of lading for the cargo. The question was answered negatively, as the bill of lading was signed by the owner of Lysaker. The Supreme Court stated that for the carrier to become liable he must in the particular case have acted in a way which can be considered as he takes over the responsibility under the bill of lading. That the bill of lading was a standard form with the carriers logos and that the ship was a part of the carrier's line trade could not lead to such a result. The Supreme Court also notes that it could be considered reasonable if the result would be the contrary, but the Court does not elaborate this sentence further. In the Swedish case ND 1960.349 the bill of lading, which contained some distinctive marks of the carrier, was signed by the broker “for the master”. The Supreme Court concluded that, although the circumstances, the agent could not be considered to have signed the bill of lading on behalf of the carrier. Neither did the bill of lading mention anything which could make the cargo owner believe that the ship was owned by the carrier. The carrier could thus not be considered to be liable under the bill of lading.

These cases were however not followed in Denmark. In ND 1966.352 was the claimant successful in pursuing the contractual carrier, although time chartered ships were used and the bill of lading did not mention the contractual carrier. The contractual carrier was considered as having accepted liability also for goods shipped on chartered vessels and the bill of lading was considered in favour of the third party, the cargo interest.⁸⁹

With these cases a new presumption rule was established, which could be only rebutted depending on the circumstances in each case. If it was clear that the bill of lading was signed on behalf of the carrier he could be liable. This could be for example if the carrier's bills of lading were used or if the name of the ship indicated that it belonged to the carrier. One example of this could be found in ND 1973.15, where the carrier was identified with the performing carrier. The presumption was however heavily debated. Critics asked why there should be a difference in the carrier's liability depending on whether he used his own or chartered ships; and if it is reasonable

89 The case was appealed, but the parties reconciled days before the proceedings in the Danish Supreme Court, Grönfors, Kurt, Sjölagens bestämmelser om godsbefordran, (under medverkan av Lars Gorton), PA Norstedt &

Söners förlag, Stockholm, 1982, pp. 185.

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for the cargo owner to have to relate to a third party.⁹⁰ This third party could be totally unknown to the cargo owner and with a foreign ship and performing carrier.⁹¹

With the incorporation of the Hague-Visby Rules this position was made statutory. In NMC 1893 section 123 it was concluded that if the “carriage was wholly or partly performed by another than the carrier; the carrier remains liable pursuant to the rules in this chapter, as far as possible, as if he had himself performed the carriage; this also applies after the bill of lading has been signed.”

(my translation). The preparatory works NOU 1973:11 concluded that it was unreasonable that the carrier, by using third party tonnage, could avoid the contractual liability towards the cargo owner.

The Scandinavian countries agreed that this was a position that ought to be prevented. It was also pointed out that there was no uniformity between the countries which also should be avoided⁹² and the rule should be statutory as to avoid any misunderstandings.⁹³ As the Hague-Visby Rules did not regulate this question; this was a special Scandinavian invention, which strongly influenced the Hamburg Rules in 1978.⁹⁴

Today, the carrier is liable for the sub-carrier towards a contracting party “as if the carrier had performed the entire carriage him- or herself” pursuant to NMC section 285. This means that the owner of the goods always can pursue the carrier, although the damage might have occurred while the goods were in the custody of the sub-carrier. The carrier is liable for the sub-carrier under all the rules in chapter 13. This means that the carrier is also liable for the sub-carrier's possible great liability regarding e.g. deck loading in section 284 and wrongful delivery to a person without production of a bill of lading.⁹⁵ The carrier will also be liable for the sub-carrier when he wilfully or recklessly with intent damages or looses the goods, and the carrier will also lose his right to limit his liability pursuant to section 283.

The carrier may only exempt himself from the liability if he expressly name the sub-carrier liable for any losses occurring on that particular part of the voyage, according to section 285 second paragraph. In the preparatory works NOU 1993:36 it was pointed out that the cargo owner

90 Sejerstad, pp. 28-29 and footnote 45.

92 NOU 1972:11, pp. 19.

93 Ot.prp.nr. 28, 1972-73, pp. 13.

94 Grönfors, pp. 185.

95 Falkanger, pp. 356.